By Alvin Cheng-Hin Lim

The China-Pakistan Economic Corridor Three Years On

In
the year since Jian Han,
the Political and Press Counselor at the Chinese Embassy in Pakistan, announced
the China-Pakistan Economic Corridor (CPEC) as having “entered the stage of
fast-track implementation … with early-harvest projects reaching fruition,”
several of these early-harvest projects have indeed been completed and
delivered to the public. In view of the completion of this initial batch of projects
just three years after Chinese President Xi Jinping’s announcement of CPEC,
experts such as Zhou Rong, a
senior researcher from Renmin University, have assessed the development of CPEC
as having proceeded “faster than expected” (Lim, 2017b, p. 5).

The
early-harvest CPEC projects which have begun operation include several power
plants which have helped to relieve “electricity shortages in major industrial
cities, which also made those areas much more competitive than previously.”
These include the Neelum–Jhelum
Hydropower Plant, whose first of four turbines commenced operations
in April. When all four turbines become fully operational in the second half of
2018, they will add 969 MW to the national grid. As it runs on hydropower,
Neelum–Jhelum will also “avoid the annual release of 2.5 million tons of CO2
from equivalent thermal plant.” Another early-harvest power plant which has
begun operations is the Port Qasim
Coal-fired Power Plant, which when fully operational will add 1,320
MW to the national grid, which is enough to bring the benefits of electricity
to “4 million local families a year.”

In
the transportation sector, several sections of the CPEC superhighway network
have been completed and are now open to the public. A recent example is the 33
km Multan-Shujaabad section of the 392 km M-5, the Multan-Sukkur Motorway, which Pakistani Prime
Minister Shahid Khaqan Abbasi officially opened on May 26, 2018. When it is completed
in August 2019, the M-5 will “connect the country’s southern port city of
Karachi with northwestern city Peshawar through the populated provinces of
Punjab and Sindh,” and will consist of a “six-lane superhighway” with “11
interchanges, 22 toll plazas equipped with latest intelligent technology, six
public service areas, five rest areas, 107 underpasses, 188 subways, 100
bridges and other facilities,” allowing drivers to travel between Multan and
Sukkur in just “four hours at the maximum designed speed of 120 km per hour.”

On
May 29, 2018, PM Shahid Khaqan Abbasi officially opened another section of the
CPEC superhighway network, the 138 km Sharqpur-Rajana section of the 230 km M-3, the Lahore-Abdul Hakeem Motorway. When complete, the
M-3 will connect Lahore with the M-4, “the main artery connecting the southern
port city of Karachi with the northwestern Peshawar.” For drivers, the M-3 will
“reduce the traffic congestion drastically … and will attract maximum passenger
and cargo movements.” In terms of economic development, the superhighways being
constructed under CPEC will “connect major cities and will ensure efficient and
safe transportation of passengers and goods to and from big industrial and
economic hubs of the country,” thereby “stimulating the economic activities in
the entire area.”

Chinese
Ambassador to Pakistan Yao
Jing, who attended the inauguration of the Multan-Shujaabad section
of the M-5, revealed that “Chinese companies working at CPEC projects have
provided over 100,000 jobs to local people and played their role to uplift
people’s lives by doing several social welfare works, including restoration and
establishment of schools and technical training centers.” With the expected completion
of up to nine CPEC industrial
zones “within the next two to three years,” further job creation is
expected. Ahsan Iqbal, the Pakistani Minister for Planning, Development and
Reforms, anticipates the generation of “massive employment opportunities” by
these industrial zones. Experts predict CPEC will create up to 800,000 jobs by 2030.

Mei Xinyu,
a researcher at the Chinese Academy of International Trade and Economic Cooperation,
warns that investors in CPEC projects should pay attention to “potential risks”
such as “Pakistan’s ability to repay its debts.”

At
the municipal level, one key CPEC project, the Orange Line Metro Train (OLMT) in Lahore, is nearing completion with “88 per cent construction work and
over 70pc of the electrical and mechanical work on the project” having been
completed as of May 2018, and the first test run of the train took place on May
16, 2018. Punjab Chief Minister Shahbaz Sharif sees the project as having the
potential to “transform people’s lives” by “creating a sense of equality and
ownership in social terms.” When complete, the OLMT will provide improved
transportation for up to half a million of Lahore’s residents, and the
government eventually intends to introduce similar metro train systems in
“other parts of the country, including Karachi and Peshawar.”

Gwadar
Port, the southern terminus of CPEC, already has a “fully functional port terminal”
and a sixty-acre Economic Free Zone. China’s
COSCO shipping company has opened a shipping line at Gwadar, with “a
cargo ship with a capacity of 5,000 containers on the route,” paving the way
for the realization of the vision of Gwadar as a major international trade hub.
The Gwadar
Free Zone, which was inaugurated in January 2018, is aimed at generating
more business at Gwadar Port, with the goal of fulfilling “the potential of the
port city.” By April 2018, “some 30 companies in different businesses such as
hotel, bank, logistics and fish processing” had been established at “the Gwadar Free
Zone with expectations of generating 790.5 million US dollars
annually after full operation.”

Geopolitics
could be another driver of economic activity for CPEC. In 2017, Pakistan became
a full member of the Shanghai
Cooperation Organization (SCO). While primarily focused on security
issues, the SCO also has initiatives to improve connectivity between its member
states, and in February 2018, PM Abbasi officially announced his country’s
interest in connecting CPEC with the SCO, which would “greatly enhance their
vitality to become a conduit for linking Eurasian landmass, China, Russia and
Central Asia with the Arabian Sea.” The integration of CPEC with the SCO could
in turn intensify the existing flows of mutual trade
and investment between the SCO member states.

The
emerging track record of successfully completed CPEC projects is important for
China’s broader Belt and Road Initiative (BRI), as this will show interested countries
that BRI projects need not result in the “debt trap” scenario that Sri
Lanka has fallen into, which led the Sri Lankan government in 2017
to cede its deep-water port at Hambantota to China for 99 years “in exchange
for debt relief.” Myanmar’s government, for instance, is currently considering
a proposed multibillion dollar financing package from China for the development
of a deep-water
port at Kyaukpyu, and some government officials are resisting the
Chinese proposal due to fears of a repetition of the Sri Lankan experience. The
successful completion of CPEC projects in Pakistan — without the government
falling into default on its Chinese loans — would go far towards alleviating
the concerns of Myanmar and other interested countries by demonstrating that
BRI megaprojects can indeed be completed without the recipient countries
falling into debt traps.

To
that end, Mei Xinyu, a
researcher at the Chinese Academy of International Trade and Economic
Cooperation, warns that investors in CPEC projects should pay attention to
“potential risks” such as “Pakistan’s ability to repay its debts.” This is
especially important given the Pakistani government’s growing debt burden: “The
country’s total debt level stands at $91.8 billion, and it will balloon to $144
billion in the next five years … Pakistan expects to obtain new Chinese loans
worth $1 billion to $2 billion to help it avert a balance-of-payments crisis.”

Apart
from financial risk, security remains another significant risk factor that
could endanger the successful completion of CPEC. This was highlighted in May
2017 when two Chinese nationals were murdered by Islamic State terrorists in
Quetta, the capital of Balochistan province. The police investigation into this
double homicide soon revealed that the victims — who were ostensibly in
Pakistan on the pretext of establishing a language school — were in fact covert
Christian missionaries, and “the Pakistani government subsequently repatriated
back to China eleven other Christian missionaries who had arrived in the same
group as the murder victims.” This incident alerted the Chinese and Pakistani
governments to an unexpected security concern: the secretive transnational
flow of missionaries. If left unchecked, this could have unpredictable
consequences for CPEC and the BRI, especially since “underground church leaders
in China have set the target to increase the number of their covert
missionaries in foreign countries from the estimated 1,000 at present to 20,000
by 2030, and they fully intend to use the BRI as their gateway into foreign
mission fields.” As the pastor of one such underground church explained: “We
have the Belt and Road policy, so there will be economic entry. Alongside the
economic entry will be companies and other groups entering, including
missionaries” (Lim, 2017b, pp. 7-8).

About The Author

Alvin Cheng-Hin Lim is a research fellow with International Public Policy Pte. Ltd. (IPP), and is the lead editor of China and Southeast Asia in the Xi Jinping Era (Lexington Books 2019) and the author of Cambodia and the Politics of Aesthetics (Routledge 2013). He received his Ph.D. in Political Science from the University of Hawaii at Manoa, and has taught at Pannasastra University of Cambodia and the American University of Nigeria. Prior to joining IPP, he was a research fellow with the Longus Institute for Development and Strategy.